The true cost of your mobile phone contract

It may seem hard to believe, but missing a mobile phone payment or paying late can have an impact on your credit rating.

So, if you’ve been rejected for a credit card, loan or mortgage application recently and can’t figure out why, then a missed mobile phone payment could be what’s casting a shadow on your rating.

Your credit report is the first point of call for lenders deciding on your suitability for credit. They’ll use the information contained in it to decide on whether you are a good or bad risk, so you want to give them the best impression of you as possible.

If they see that you’ve missed payments in the past, they could question your reliability and turn down your application if they think you’re too much of a risk.

Missed payments

Usually, mobile phone contract payments are made by Direct Debit. If you haven’t got enough money in your account on the day your payment is due you bank may “return” the Direct Debit – in other words, prevent it from leaving your account. You’ll then have to contact your mobile phone provider yourself and arrange for them to claim the Direct Debit again when you have got money in the account – or make a card payment to cover the bill.

If you miss a payment or pay your bill late, it will show up on your credit history. If you miss three payments in a row, your mobile phone provider may class this as a default. In this case, it will remain on your credit record for six years and could count against you every time you apply for credit over that period.

Most current account providers offer some sort of alerting – such as text messages - if they return payments. Sign up for these, or keep a close eye on your account via online banking to make sure that all your payments go out on time.

Damage control

Whether you’ve missed or been late with payments or not, it’s important to know exactly what’s on your credit file. It might be that there are some mistakes on there that you can fix easily, which is why it’s good to regularly check it.

Once you’ve got access, check all the details – if there is something on there that doesn’t look right – for example, a payment that you’re sure you made – contact the relevant agency and query it with them. If you have evidence, send that across to them too. Click here to read more tips on what to look out for.

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